075-NLR-NLR-V-66-JAFFNA-MUNICIPAL-COUNCIL-Appellant-and-A.-PERUMAIYINAR-Respondent.pdf
G. P. A. SILVA, J.—Jaffna Municipal Council v. Perumaiyinar
327
1964Present: Herat, J., and G. P. A. Silva, J.JAFFNA MUNICIPAL COUNCIL, Appellant, and■ A. PERUMAIYINAR, Respondent
S. C. 137/1962—D. G. Jaffna, 873(M
Local authority—Imposition of entertainment tax—Requirement of proper resolution—
Entertainment Tax Ordinance, ss. 2, 3, 8 (J).
A resolution was passed in 1946 by an "Urban Council to levy entertainmenttax at 20 per cent. The' Urban Council was succeeded later by a MunicipalCouncil (appellant) which, without passing a resolution, sought to levy taxat 25 per cent.
Held, that a local authority is precluded by sections 2, 3, and 8 (1) of theEntertainment Tax Ordinance from levying entertainment tax in the absenceof a proper resolution.
Appeal from a judgment of the District Court, Jaffna.
G. Ranganathan, for Plaintiff-Appellant.
No appearance for Defendant-Respondent.
Cur. adv. vult.,
March 17, 1964. G. P. A. Suva, J.—
The plaintiff-appellant in this case, the Municipal Council of Jaffna,sued the defendant-respondent as organiser and/or proprietor of anentertainment called T. K. S. Bros. Dramas for the recovery of anamount of Rs. 13,541'63 being 25 per cent, of the total sum receivedas payments for admission to the said entertainment in terms of section. 2of the Entertainment Tax Ordinance, No. 12 of 1946, as amended byOrdinance No. 43 of 1947 and. Act No. 2 of 1952. The appellant alsoclaimed 75 cts. as advertisement charges.
The respondent took up the position in his answer that he was notliable to pay any sum to the appellant as no resolution to levy entertain-ment tax had been passed by the Council and he had devoted the netproceeds to charity and also that the claim was prescribed in law.
The following issues were raised at the trial.
Was the defendant the organiser and proprietor of the entertain-ment named T. K. S. Brothers Dramas within the Plaintiff Council’sarea from 11.2.55 to 24.2.55 and 25.2.55 to 27.3.55 ?
Did the defendant as such organiser and proprietor receive a sumof Rs. 54,166 • 50 as payment for admission to the said entertainment ?
Is the defendant liable to pay to the plaintiff Council a sum ofRs. 13,541 *62 as entertainment tax ?
Is the defendant liable to pay 75 cts. as advertisement charges ?
If the above issues are answered in the affirmative, is the plaintiffentitled to recover from the defendant a sum of Rs. 13,542’ 37 ?
{a) Did the plaintiff Council pass a resolution as required bysection 2 of the Ordinance 12 of 1946, to impose and levy entertainmenttax ?
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G. P. A. SILVA, J.—■Jaffna Municipal Council v. Perumaiyinar
Was such resolution if passed approved by the Executive Com-mittee and published in the Gazette ?
If issue 6 is answered in the negative, is the plaintiff entitled tolevy entertainment tax %
Did the expenses of the said entertainment claimed by thedefendant exceed 40 per cent, of the gross proceeds of the saidentertainment 1
If not, is the defendant entitled to claim exemption from paymentof any tax under section 8 of the Ordinance ?
No issue appears to have been framed on the question of prescriptionset out in the answer presumably because it was not pursued by therespondent.
The District Judge entered judgment for the plaintiff-appellant for• 75 cts. only but dismissed his action in respect of the entertainment taxclaimed with costs.
Section 2 of the Entertainment Tax Ordinance provides as follows :—.(1) Every local authority shall have power, by resolution, to imposeand levy a tax (hereinafter referred to as the “ entertainment tax ”)on payments for admission to entertainments held in the area within theadministrative limits of such authority at such rate or rates as may bespecified in such resolution.
The entertainment tax may be imposed at different rates for differeneamounts of payments for admission, but so however that the ratt- applicable in the case of any such amount shall not be less than five percentum or more than twenty-five per centum of the amount.
(2) Every resolution under sub-section (1) shall be submitted to theMinister for approval and, if so approved, shall be published in theGazette and shall come into operation on the date of such publication or' on such later date as may be specified in such resolution.
Section 3 of the Ordinance provides that where a resolution imposingan entertainment .tax is in operation in any area, every payment foradmission to any entertainment to which this Ordinance applies andwhich is held in that area shall, save as otherwise provided in section 8or section 9, be subject to the entertainment tax so imposed.
Section 8 (1) reads: All payments for admission to an entertainmentshall be exempt from and shall not be subject to the entertainmenttax if—
(а)the whole of the gross proceeds of such entertainment or the whole
of the net proceeds thereof, are devoted to any such public,religious, – educational, philanthropic or charitable purpose asmay be prescribed by regulation ; and
(б)the proprietor of such entertainment has, not less than three days
before the date on which the entertainment is held, famishedto the proper officer of the local authority by whom the taxis imposed a statement in the prescribed form to the effectthat the gross or the net proceeds of the entertainment are to bedevoted to any such purpose or purposes.
G-. P. A. SILVA J.—Jaffna Municipal Council v. Perumaiyinar
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Every such statement shall be verified by a declaration to the effect1that the particulars contained in the statement are true and accurate.
In this sub-section, “net proceeds” means the sum remaining afterdeducting, from the whole of the gross proceeds, the amount of the actual:expenses of the entertainment or an amount equal to forty per centumof the gross proceeds, whichever such amount is the less.
From a reading of these sections it would appear that a local authorityis empowered by resolution to impose and levy a certain percentage ofentertainment tax (not less than 5 per centum or more than 25 percentum) on payments received for admissions to entertainments heldin the area within the administrative limits of such authority providedsuch resolution is approved by the Minister and published in the Gazetteas required by section 2 (2) subject to the exemption set out in section 8.
The basis of the plaintiff’s claim is that the plaintiff had a right in lawto levy Entertainment Tax. In order to justify such a right which ,imposes a financial burden on the defendant it is necessary for the plaintiffto show that the legal requirements which are necessary to found thatright should have been strictly complied with. According to section 2of the Entertainment Tax Ordinance the following requirements shouldbe complied with in order that a local authority may be entitled to levythe tax:—
there must be a duly passed resolution of the local authority.
the said resolution must be approved by the Minister.
the said approval should be published in the Government Gazette.
It is clear that if the first of these requirements is not complied withthe right to levy tax would not arise. It is equally clear that if there hasbeen an irregularity in regard to the first requirement the approval by theMinister of an alleged resolution and/or the publication of such approvalin the Government Gazette will not invest the local authority with theright to levy entertainment tax.
The respondent’s contention at the trial which was upheld by. thelearned District Judge was that no proper resolution was passed by theappellant and it is therefore necessary to examine the minutes of themeeting at which the resolution was said to have been passed. Theminutes of 26th December 1952 of the Jaffna Municipal Council enumerate18 main items and many more sub-items, some of which took the formof decisions and others of adoptions. The decision in regard to theEntertainment Tax which was item No. 10 was to the following effect:—
*4 Considered papers regarding the increase in the rate of EntertainmentTax.
It was decided to increase the rate of 25 per cent, (uniform) Messrs. K.Kuhathasan, A. Thurairajasingham and C. Nalliah voted against andMr. R. C. Maumatharayan refrained from voting. ”
Considering that on the original occasion at the meeting held on 13thDecember 1946 by the Urban Council there was a minute of the decisiontaken to levy entertainment tax at 20 per cent, and thereafter a resolutionto that effect in the proper form, and having regard to the fact that the1946 resolution was passed by the Urban Council, Jaflha, which was the
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Manis Appu v. Ratwatte
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predecessor of the Municipal Council, the contention of the defendantthat no proper resolution was passed by the Municipal Council to enableit to levy entertainment tax appears to me to be sound. The fact thatthe original resolution was one by the Urban Council while the presentplaintiff is the Municipal Council would seem, if at all, to buttress thiscontention still further. In these circumstances, the learned DistrictJudge was right in holding that the appellant Council was not entitledto levy entertainment tax in the absence of a proper resolution.
It was contended by Mr. Renganathan on behalf of the appellantthat, if the so-called resolution on which the Municipal Council reliedto levy entertainment tax at 25 per cent, was not in order, it was entitled,by virtue of the earlier resolution of the Urban Council, to whose rightsthe Municipal Council succeeded, to levy such tax at the rate of 20per cent. While there is substance in this argument I see that there is adifficulty in the way of the appellant Council in this regard too, as thismatter has not been raised as an issue in the trial court. Had the issuebeen raised, perhaps the appellant Council may have succeeded ; butas it has not been done one is not certain whether any attack wouldhave been directed against the earlier resolution too if it had been raised.Without the defendant-respondent having had an opportunity thereforeto raise any objection to such an issue in the lower court, it would not bejustifiable to hold in favour of appellant’s contention in this Court.
In the circumstances, the appeal is dismissed.
Herat J.—I agree.
Appeal dismissed.